In a bold move to protect domestic industries, the United States recently imposed substantial tariffs on a wide range of imports from China. This decisive action has sent ripples through the global trade landscape, prompting other nations to consider similar protective measures.
CareEdge Ratings, a credit rating agency, has weighed in on the potential consequences of this policy shift. The agency believes there may be a growing likelihood that other countries may adopt high tariffs on imports as a strategy to shield their economies. If this trend gains traction, it could significantly alter international trade dynamics and reshape economic relationships worldwide.
The US decision to raise tariffs is rooted in a broader strategy to address trade imbalances and bolster domestic manufacturing.
In a global economic update last week, the rating agency stated, "Impact on China's growth is to be limited as tariffs cover only 0.5 per cent of exports. However, escalating US-China tensions raise concerns."
Earlier this month, the White House introduced significant tariffs on a range of Chinese products in a move perceived as protectionist, aiming to address the trade imbalance. These measures include a 100 per cent tariff on electric vehicles, a 50 per cent tariff on semiconductors, and a 25 per cent tariff on electric vehicle batteries imported from China. Additionally, the tariffs cover steel, solar cells, and aluminium products.
"For the US, consumer welfare may suffer if domestic substitutes fail to compete with Chinese imports on price," CareEdge opines.
U.S. Trade Representative Katherine Tai highlighted the necessity of these measures to combat the influx of low-cost Chinese products into global markets. According to the White House, approximately $18 billion worth of imports from China will be impacted, with most of the effects on batteries and battery components.
